Sunday, April 24, 2016

A Discussion on Trump, War and Protectionism

In our ongoing discussion with Dr. Block about "Libertarians for Trump", we have argued that Trump is the most likely to be aggressive, while Block has contended the whole time (and this was the impetus for forming the group in the first place) that Trump represents the least interventionist candidate- at least on the Republican side. In our critique, we have pointed out the fact that Trump has said that he would put US troops on the ground to fight ISIS, and to encourage Japan and South Korea to develop their nuclear weapons. Block counters that the other candidates would surely be just as bad- and probably worse!

However, we have neglected to examine a Trumpian stance is unique to him in the Republican presidential race- his consistent and passionate advocacy for US protectionism. I contend that there is and has been no candidate in the presidential race that is as "hawkish" or as good a salesman on the idea of US protectionism than Donald Trump. In Human Action, Mises points out that protectionism is the impetus for war:"It is certainly true that our age is full of conflicts which generate war. However, these conflicts do not spring from the operation of the unhampered market society. It may be permissible to call them economic conflicts because they concern that sphere of human life which is, in common speech, known as the sphere of economic activities. But it is a serious blunder to infer from this appellation that the source of these conflicts are conditions which develop within the frame of a market society. It is not capitalism that produces them, but precisely the anticapitalistic policies designed to check the functioning of capitalism. They are an outgrowth of the various governments' interference with business, of trade and migration barriers and discrimination against foreign labor, foreign products, and foreign capital." (emphasis mine)

My view is that even if Dr. Block and other libertarians would like to shuck aside the myriad provocative statements that Trump has made in the area of foreign policy, they cannot ignore Trump's protectionist rhetoric. Do these gentlemen disagree with Mises that such policies are "precisely" what produces conflict? If they do agree, how can they continue to support Donald Trump, the greatest advocate for US protectionism?-- Rick

My view is not that Trump would be the most aggressive in terms of foreign policy but that there is no way to determine if he is better or worse, so there is no reason to support him on those grounds.

And domestically he has the potential to be much worse, although we don't know for sure.

AS far as the protectionist argument, Block would just argue, incorrectly in my view, that the others would most certainly get us into more wars, so Trump couldn't be worse here even with his protectionist views.

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Miller response:

Robert,

"AS far as the protectionist argument, Block would just argue, incorrectly in my view, that the others would most certainly get us into more wars, so Trump couldn't be worse here even with his protectionist views."

I agree such an argument would be incorrect- but we can actually set all that aside. What Mises is saying above is that the policy of protectionism precedes the aggression and is the cause of conflict; it is correctly considered prior to foreign policy. We have been discussing the differences in how the candidates plan to deal with the effects of protectionism (conflict), and that is all well and good. But, Trump has put this front and center and is- most importantly- the best salesman of continuing and pushing to new heights the protectionist policies of the US. In fact, "Protectionism" is a one-word way of describing the Trump brand, "Make America Great Again".

This is not to say that there is a free market candidate to choose, but that out of all of them, Trump seems to be the least libertarian when it comes to economic interventions in the area of trade. It is difficult to imagine any of the other candidates making a more persuasive case than Trump has for protectionism, and he is, therefore, the worst of the lot in creating the conditions which lead to conflict. For this reason (among others), libertarians should not support Trump.

I don't think tariffs against China, and certainly not Mexico, are going to bring us to war.

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Miller response:

Robert,

Perhaps Mises was speaking of Europe, but what in his analysis indicates to you that his view is specific to Europe? The impetus for conflict that he is referring to stems from the law of Comparative Advantage that Trump seemingly fails to grasp. This comes a little after the quote I sent you before:

"...today economic backwardness in a foreign country, endowed by rich natural resources, hurts the interests of all those whose standard of living could be raised if a more appropriate mode of utilizing this natural wealth were adopted. The principle of each nation's unrestricted sovereignty is in a world of government interference with business a challenge to all other nations. The conflict between the have-nots and the haves is a real conflict. But it is present only in a world in which any sovereign government is free to hurt the interests of all peoples--its own included--by depriving the consumers of the advantages a better exploitation of this country's resources would give them. It is not sovereignty as such that makes for war, but sovereignty of governments not entirely committed to the principles of the market economy." (emphasis original)

"I don't think tariffs against China, and certainly not Mexico, are going to bring us to war."

I don't see what makes these two governments unique, as to be able to avoid the conflict as Mises presents it above. Why are you confident that such policies aimed at these two specific countries by the US government will not cause conflict? Or, is it that you feel that such conflict is not as dangerous as Mises claims? Something else altogether?

You must consider the military strength of countries involved. Mises wrote Human Action after two horrific wars in Europe where protectionist policies contributed to the willingness of the various countries to do battle, but protectionism itself is not sufficient to cause war.

For example, if the United States raised tariffs against Bermuda. Bermuda wouldn't attack the US.

I see Mexico in a similar weak position militarily compared to the US. It's possible you could see some Mexican led terrorist operations in the US, if Trump actually tried to deport 11 million illegals, but a Mexican army is not going to attack the US because of tariffs. I would also think China would be hesitant to directly attack the US, that might change 10 or 20 years down the road, but I don't see it now.

The hot point for US war remains the Middle East, which has nothing to do with tariffs, and where Trump seems quite willing to take on a battle.

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Miller response:

All true! As well, Bermuda is not "endowed by rich natural resources", unless you are in the market for limestone or losing planes and ships...But, Mises does speak of the humble Swedes and Swiss in the sentence leading up to that- not exactly military powerhouses! Here is the full passage:"Two hundred years ago it was of little concern to the Swedes or the Swiss whether or not a non-European country was efficient in utilizing its natural resources. But today economic backwardness in a foreign country, endowed by rich natural resources, hurts the interests of all those whose standard of living could be raised if a more appropriate mode of utilizing this natural wealth were adopted. The principle of each nation's unrestricted sovereignty is in a world of government interference with business a challenge to all other nations. The conflict between the have-nots and the haves is a real conflict. But it is present only in a world in which any sovereign government is free to hurt the interests of all peoples--its own included--by depriving the consumers of the advantages a better exploitation of this country's resources would give them. It is not sovereignty as such that makes for war, but sovereignty of governments not entirely committed to the principles of the market economy."

I want to ask, are you familiar with the section from Human Action that we are discussing here, The Conflicts of Our Age? I ask not out of snarktetude!, but because I think Mises is driving at a different point than we are able to see with these little snippets of text I have included, and I am afraid I am not presenting it in its full glory! So, if you have a few minutes, could you give me your opinion after reading that section in order instead of my piecemeal offerings as to exactly what Mises is saying there? Or, if you are sitting there thinking, "This dumbass doesn't think I know this section like the back of my hand!...Dumbass!", feel free to say so! :)The Misian view here is probably more nuanced than I have presented in our conversation. For now, I will just leave you with another one from that section, and wish you an until we meet again! I really have enjoyed this discussion, Robert! I sincerely value your opinion and appreciate that you have taken the time to discuss this with me! Here ya go:"Many of the richest deposits of various mineral substances are located in areas whose inhabitants are too ignorant, too inert, or too dull to take advantage of the riches nature has bestowed upon them. If the governments of these countries prevent aliens from exploiting these deposits, or if their conduct of public affairs is so arbitrary that no foreign peoples whose material well-being could be improved by a more adequate utilization of the deposits concerned. It does not matter [p. 687] whether the policies of these governments are the outcome of a general cultural backwardness or of the adoption of the now fashionable ideas of interventionism and economic nationalism. The result is the same in both cases.There is no use in conjuring away these conflicts by wishful thinking. What is needed to make peace durable is a change in ideologies. What generates war is the economic philosophy almost universally espoused today by governments and political parties. As this philosophy sees it, there prevail within the unhampered market economy irreconcilable conflicts between the interests of various nations. Free trade harms a nation; it brings about impoverishment. It is the duty of government to prevent the evils of free trade by trade barriers. We may, for the sake of argument, disregard the fact that protectionism also hurts the interests of the nations which resort to it. But there can be no doubt that protectionism aims at damaging the interests of foreign peoples and really does damage them. It is an illusion to assume that those injured will tolerate other nations' protectionism if they believe that they are strong enough to brush it away by the use of arms. The philosophy of protectionism is a philosophy of war. The wars of our age are not at variance with popular economic doctrines; they are, on the contrary, the inescapable result of a consistent application of these doctrines."---RW response:

You need to read more carefully what you quote.

This was your initial argument:

"I contend that there is and has been no candidate in the presidential race that is as 'hawkish' or as good a salesman on the idea of US protectionism than Donald Trump. In Human Action, Mises points out that protectionism is the impetus for war...My view is that even if Dr. Block and other libertarians would like to shuck aside the myriad provocative statements that Trump has made in the area of foreign policy, they cannot ignore Trump's protectionist rhetoric. Do these gentlemen disagree with Mises that such policies are 'precisely' what produces conflict? If they do agree, how can they continue to support Donald Trump, the greatest advocate for US protectionism?"

Buy you fail to take into consideration the Mises qualifier even though you quote it:

" It is an illusion to assume that those injured will tolerate other nations' protectionism if they believe that they are strong enough to brush it away by the use of arms."

Protectionism is not going to result in war with Mexico for this very reason and extremely unlikely with China (at least for 20 years or more).

5 comments:

The inherent fact that all "free trade" deals are conducted by and for crony capitalists via the structures of governments voids any possible beneficial effect for the normal--non-connected--individual or industrialist. Wenzel's wilfully blind support of such trade deals also delegitimizes his supposed hatred of government intervention.

There is no "free trade" if governments, between themselves, agree the terms of trade. Why is this so difficult to accept?

Every time you have railed against Trump for not supporting "free trade", you support the current notion of "free trade"--which is nothing more than government approved and conditioned trade. Your hypocrisy is palatable.

both are correct but i would strongly disagree that Mr Wenzel is a hypocrite in any sense...His charge against Trump has nothing to do with support of any current "free" trade deals that are bleeding the US...it is the said comparative advantage which is a very serious concept ...but still i would think that the problem lays on mr Trump ability or lack of to explain his concepts in this matter...what I would assume mr Trump is trying to get is that the counterpart in any deal to open up their countries at the same level of the US ..so their tariffs would have to go down like the US...of course that there is the so called comparative advantage , that support Mr Wenzel criticism of mr Trump...however if followed to the tilt , the country with such "comparative advantage" would have its cash flow sucked out in the long term if and only said comparative advantage did not translate in a massive and continuous "innovation" development...so here lays the problem..if you isolate one "variable" such as overall low prices for goods in general as a major comparative advantage but the economy itself fails to keep on the pace by innovating in multiple areas, by loosing massive capital goods (with or without FED interventions to create such "capital" goods and due to low "innovation" ) effectively diminishing the innovation by a negative feed back , what is in it , mr Wenzel ? It is wrong to suppose that the end of the roman empire was because of its state spending spree with no actual monetary base to support..actually the problem was born when the model which the whole roman civilization was based upon, slavery trading, reached their "innovation" peak, supposedly a never ending and increasing new slaves cycle expansion, that came to a stop by assimilating new areas that stretched their ability to keep cohesive control and the system dynamics...foremost telling was that after conquering the nations providers of new slaves into the system , they were "liberated" from their obligations to "donate" slaves into the empire and so new nations entered to a commonwealth empire that would need to have their slavery demands attended...so the empire needed to expand continuously to remain balanced which of course could not given their natural limits and reached the peak of exhaustion ...

I believe protectionism is protecting THIS country. Protecting our STANDARD OF LIVING! By allowing uncontrolled illegal immigration and low tariffs on in incoming goods we have LOWERED our standard of living in this country. Other countries tax us and protect their jobs and manufacturing and we allow them to do that while 1/2 our work force remains UNEMPLOYED. This is what has occurred because our tariffs on incoming goods are too low :Between 2000 and 2014 70% of all new jobs went to foreignershttp://www.politifact.com/punditfact/statements/2014/dec/02/peter-morici/economist-immigrants-have-taken-all-new-jobs-creat/

52,673 US 2007 Household Income in US52,250 US 2013 -$423. US Drop in Household income between 2007 and 2013 LOWERING OUR STANDARD OF LIVING!

60% of Households Now Receive More in Transfer Income Than they Pay in Taxes - REDISTRIBUTION OF INCOME!http://www.zerohedge.com/news/2014-11-18/60-households-get-more-benefits-they-pay-taxes